The present application relates to methods and systems for providing deferred annuities and other insurance products.
Annuities are generally contracts or products that provide income or other payments for a fixed or variable period of time in exchange for one or more premium payments. Annuities generally have two distinct phases: the accumulation phase and the annuity or income phase. During the accumulation phase, the annuitant pays a premium, which may be in the form of a lump sum premium or a series of premium payments. During the income phase, the insurance company or any other provider of the annuity makes income payments to the annuitant for the stated term of the annuity contract, e.g., for a fixed term or for the life of the annuitant. The income payments may begin immediately or may be deferred for a stated period of time. The amount of the income payment will generally vary based on, among other things, the amount of the premium payment, the amount of time that income payments are deferred, the duration of the income payments, mortality rates and other actuarial data, and the interest rate.
As attractive as annuities may be, annuities have drawbacks that may make them less desirable investment options for some individuals. For example, for a fixed rate deferred annuity the interest rate is locked in at the time the annuity is purchased. When interest rates are relatively low, potential purchasers may be disincentivized to purchase annuities at the thought of locking in their income payments using a low interest rate. Conversely, potential purchasers may expect interest rates to increase at a later date and thus pursue other investments rather than annuities. Similarly, potential purchases may not want to be locked into other variables that factor into the calculation of their income payments, figuring those may possibly change in the interim as well.
Accordingly, there is a need for methods for providing annuities and annuity options that are not so limited and that avoid or minimize these problems.